Investment advisory firm faces fraud allegations

Company president misled clients, inflated values, regulators say

Federal regulators are charging a Phoenix investment firm and its president with defrauding clients in a series of investments more than four years ago.

The Securities and Exchange Commission on Wednesday accused Walter Clarke, president of Oxford Investment Partners, of convincing clients to invest in businesses in which he had undisclosed interests.

Regulators also accused Clarke of fraudulently inflating the value of his company when he sold a piece of it in 2008.

Neither Clarke nor Oxford's general counsel returned calls Wednesday.

In an order filed against Oxford, the SEC said Clarke was facing acute personal financial troubles when he got three clients to fund more than $300,000 in loans originated by Cornerstone Funding Group.

Clarke did not disclose that he was a co-owner of Cornerstone and would profit from the loans, according to SEC investigators. Within months, the borrowers defaulted on the loans, causing clients to lose their investments.

Clarke also convinced four clients in 2008 to invest about $40,000 in a company called HotStix without disclosing that owners of HotStix were also co-owners and paid consultants of Oxford, the SEC said.

HotStix was owned by Tim and Eric Crown, co-founders of Tempe-based Insight Enterprises. According to the SEC, the Crowns purchased a portion of Clarke's ownership interest in Oxford and executed a consulting agreement with the firm.

HotStix later filed bankruptcy and clients lost their money.

"And when Clarke's own financial problems prompted him to sell a stake in Oxford to a client, he fraudulently inflated the value of his firm by at least $1.5 million to make the client overpay by at least $112,000," SEC officials said.

The client paid $750,000 for a 7.5 percent ownership stake in Oxford, according to the SEC.

Regulators said that Clarke used an "excessive and baseless" multiple to Oxford's 2007 revenue, quadrupled the company's fourth-quarter revenue and added a $1 million premium to the company's valuation.

On its Website, Oxford bills itself as a boutique wealth-management firm that offers financial, retirement, tax and investment planning.

"We want to help you develop a long term plan and provide execution that produces peace of mind, allowing you to focus on what's most important," the Website states.

The SEC is seeking an administrative hearing to determine what, if any, sanctions should be taken against Clarke and his firm.

This is one of a series of articles by the Call 12 for Action team, a group of reporters with The Arizona Republic and 12 News focused on issues important to Arizona consumers. Veronica Sanchez, Dave Cherry and Robert Anglen lead the Call 12 for Action team. Contact the reporter at robert.anglen@arizonarepublic.com.

Veronica Sanchez, Dave Cherry and Robert Anglen lead the Call 12 for Action team. Call 12 for Action has a team of trained volunteers working to help people resolve disputes with companies. Last year, Call 12 helped recover more than $1 million for customers.

Here to help

If you have a problem with a business you would like us to investigate, contact Call 12 for Action.

By phone: Volunteers take calls from 11 a.m. to 1 p.m. Monday through Friday at 602-260-1212.